On Friday, Barclays (LON:) analyst adjusted the firm’s stance on Tomra Systems ASA (TOM:NO), upgrading the stock from Equalweight to Overweight. Alongside the rating change, the price target was also increased to NOK 190.00, up from NOK 165.00. The revision reflects the view that Tomra’s Collection business is set to experience higher growth rates than currently anticipated by the market consensus.
The optimism from Barclays is attributed to the recent Deposit Return Scheme (DRS) legislation enacted in several countries. This legislation is expected to be a significant growth driver for Tomra’s Collection segment, which is considered the company’s highest multiple business. A shift towards this segment is likely to result in a rerating of the company’s stock, according to Jain.
The new price target suggests an approximate 18% upside potential from the stock’s price on Friday. The upgrade and increased price target signal Barclays’ confidence in Tomra’s growth prospects, particularly within its Collection business.
Tomra Systems ASA is known for its advanced collection and sorting solutions. The company’s technology is pivotal in the recycling and resource recovery industries, helping to optimize material recovery and reduce waste. The recent legislative developments are likely to enhance the demand for Tomra’s services, as countries seek to improve recycling rates and manage waste more effectively.
The analyst’s assessment indicates that the market may not have fully recognized the potential impact of the DRS legislation on Tomra’s business. With the upgrade to Overweight, Barclays anticipates that Tomra Systems will outperform its peers in the near future.
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